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TMI Blog1964 (4) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... cks of jute described in the Hypothecation Deed to secure a loan to granted by the plaintiff up to a limit of Rupees 10 lakhs (Pakistan Rupees). On the same date i.e., 8, November, 1954, the defendants Nos. 1, 2 and 3 executed in Calcutta a Deed of Guarantee in favour of the plaintiff in its Calcutta Branch by which the defendants jointly and severally agreed repayment of monies due in the said overdraft account of the Company in Narayanganj Branch with the agreed interest at 1% over State Bank of (Pakistan rate of interest with a minimum of 41/2% per annum. It was further agreed that the amount of the principal together with interest was to be paid by the defendant when called upon to do so; and lastly the amount of the liability was to be calculated in Indian Rupees at the rate of exchange declared by the State Bank of Pakistan. 4. On 21 October, 1955, the defendant no. 2 executed in Calcutta a Letter of Lies in favour of the plaintiff and deposited by way of pledge 20100 shares of Swatantra Bharat Paper Mills Ltd., for the purpose of creating security in respect of the overdraft on certain terms mentioned in the Letter of Lien. It is said that as the said amount outstanding in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of any liability under the said Deed upon the defendants that the monies payable could be legally transmitted to the account of Central Jute Co. Ltd., in Narayanganj Branch of the plaintiff in East Pakistan. (e) That the contract of Guarantee has become impossible of performance as no money could be or can be transmitted to Narayanganj. (f) The Letter of Lien is illegal or in contravention of the respective Foreign Exchange (Regulation) Act. 1947 in force both in India of in Pakistan and as such void. , (g) That the sale of the shares in Swatantra Bharat Paper Mills was in contravention of the Foreign Exchange (Regulation) Act then in force in India as no permission of the Reserve Bank of India had been obtained prior to or after the alleged sale and in any event the alleged sale was without proper notice to the defendants and not made by proper advertisement or by public auction and/or in accordance with law and as such the plaintiff is bound to return the said shares to the defendants. 6. Upon these pleadings the following issues were raised: ISSUES: 1. (a) Did the defendants guarantee payment of the dues of the plaintiff in respect of the advances made in the overdraft accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled? 7. The first question to be considered is as to whether the plaintiff's claim is barred by the Law of Limitation. This was argued as a preliminary issue. In my opinion, this case can be disposed of on this issue of law. Order 14, Rule 2 of the Code of Civil Procedure is mandatory and so I proceed to consider this issue of law in the first instance. 8. This question has to be considered from two aspects - (1) Liability of the three defendants under the Deed of Guarantee, (2) Liability of the defendant No. 2 under the Deed of Lien. 9. It cannot be controverted that the actual liability of the defendants is in respect of the overdraft account of the Central Jute Co., in Narayanganj Branch of the plaintiff. It is contended on behalf of the defendants that if the liability in respect of the said overdraft account of the company is barred by the Law of Limitation the guarantee is gone because under Section 128 of the Contract Act the liability of the surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract. It is admitted that this action has been brought by the plaintiff on the Deed of Guarantee and also on the Letter of Lie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dged and replied to by the Narayanganj Branch on 23 February, 1956. Thus it cannot be doubted that the Bank admitted in clear words that it had despatched the letter dated 14 February, 1956 to all the guarantors. The defendants have also admitted having received the letter of demand dated 14 February, 1956. 11. Next it appears that on 18 May, 1956, there is credit entry for Rs. 8633-14.6 in the over draft account of the Company. The counsel for the defendants denied any payment by the defendants on 14 May, 1956. It appears that nobody explained what it was for. 12. Apart from the letter dated 14 February 1956, which was served on all the defendants as I have said before there are some other letters so far as Tikamchand Daga is concerned. The letters are dated 13 March, 1955, 9 May, 1956, 20 June, 1956, 6 August, 1956 and the telegram dated 7 March, 1957. Of these letters the letter of demand dated 6 August, 1956 no doubt is an unconditional demand after the entire account had come to a standstill. If any of these be taken as a letter of demand, the claim is barred against Tikamchand. So far as H. R. Daga and P. R. Daga is concerned, it should be remembered that the letter of demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is three years under both the articles. 16. But Mr. Mitter argues that demand was not made on 14 May, 1956, as the Calcutta Branch had no authority to make such demand. According to him demand was legally made by Sandersons and Morgans on 28 July, 1959. I cannot agree. The first demand was no doubt made on 14 February, 1956 in unequivocal terms. It is admitted that the Calcutta Branch of the plaintiff had full authority of the London Head; Office to take the guarantee in question. The legality of the Deed of Guarantee is accepted by the plaintiff and is relied on, as the suit is based on the Deed of Guarantee. Not a single question was asked or put suggesting that the Calcutta Bank had no authority to make demand for payment under the Deed of Guarantee. In my judgment, authority to take guarantee carries with it the authority to make demand for payment from the guarantors. Therefore, the demand on 14 February, 1956 was a legal demand and the time would therefore run from that date. In that case also the claim is barred. 17. A creditor cannot by making successive demands extend the time for limitation of a claim. The time is to run from the first demand if the claim is payable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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